The serious flaws in the Offshore-Outsourcing-is-good-for-you argument

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Rationalisation

It is a fact about human nature that as soon as something happens that people really didn‘t want to happen, that they start rationalising about how it is not so bad, and how it might even have some advantages.

We feel that this is certainly the case with the Press Release from agencies‘ representatives Atsco as regards their brain trust on offshore outsourcing.

They say that there will be great opportunities for UK workers to go abroad and work where offshore outsourcing is done.

What is left unsaid is that although average Indian salaries in IT, at around 16 times normal Indian salaries, are still a little under £5,000 a year – which compares to the average salary for employees in the UK of more than £36,000.

For contractors in the UK, the average annual income, according to e-skills is £60,000 a year.

So, although there may well be opportunities, it is at salary levels that are way below what are needed to live in the UK, so unless someone is thinking of going to live in India for good, then their total salary probably doesn‘t even pay the mortgage back home.

Managers for the Indians

The Press Release also states that the panel thinks that there will be a great need for Project Managers from the UK in countries like India to run their projects. I think that we are getting a little bit of déjà vu here.

One wonders why India can produce developers arguably as good as our developers, and analysts as good as our analysts, but when they need someone to manage a project, they need someone sent across from Blighty at great expense, and earning probably ten times what they would pay a Project Manager in India, to run their projects fro them.

One wonders how Indian software companies like Wipro and Infosys who are both valued at over $5 billion on the stock market, managed to grow so large when there is such a shortage of capable IT project managers in India.

The more likely scenario is that India will be able to provide all the Project Management expertise that it needs, as will other developing countries, at prices much cheaper than they could hire one from the UK – and that is almost certainly what they are going to do.

Tapping British Talent

Also, according to the Press Release, ‘Indian recruiters are already setting up in the UK to tap British IT talent’.

Most Indian companies who set up in the UK are not setting up here in order to tap British talent. They are setting up as a ruse to enable them to be able to import Indians to the UK cheaply.

The work permit rules state that for Intra Company Transfers, UK companies can bring in their employees from their offices offshore to work in the UK if they have company specific skills, e.g. they have knowledge of a software package created by the company in their offshore office that is now going to be used in the UK.

So what have the Indian companies done?

Why, they‘ve set up UK legal entities, so that they are in effect British companies and they can now bring in cheap labour from their ‘˜offshore offices‘ to work for clients in the UK.

The fact that most of these have no company specific skills, but are bog standard C++ and Java developers etc. is not picked up by our Work Permits (UK) department.

There may well be Indian recruiters also setting up in the UK, but when they get the opportunity, they are going to use Indians at 5K a year rather than 36K or 60K a year that the Brits would cost.

It is fanciful in the extreme to say that they are setting up here to tap British talent.

Danger for Britain

Also, according to Ann Swain, Chief Executive of ATSCo: ‘Many outsourcing projects still fail to meet business objectives and there is a danger that if work is shifted overseas only to be brought back, the UK‘s highly skilled technology workforce, which has been laboriously built up, will have been seriously eroded.””

I can tell you, that if projects are sent offshore and then brought back to the UK because they‘ve failed, this will not be any cause for worry for those who work in IT in the UK. In fact they are more likely to be dancing in the streets.

If the work sent offshore is brought back, anyone outside the UK Government can tell you that there are tens of thousands of unemployed IT workers who would be very happy to jump at the chance to get back into work.

It is a good idea to look on the bright side of life and when something that you didn‘t want to happen actually happens, to look at how one can best take advantage of the new situation.

This is only realism and pragmatism.

However, to say that something is actually good for you when it patently isn‘t, doesn‘t serve any useful purpose.

Back to the drawing board lads!

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